불가리아 주요 경제뉴스 (17 - 24 February 2012)

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT (17 - 24 February 2012)

 

Sections/headline briefs:

 

MACROECONOMY:

v  IT leads in job creation in Bulgaria – economist

v  EC Lowers Drastically 2012 Growth Forecast for Bulgaria

v  Bulgarian-German Trade Turnover Up 14% 2011 Y/Y

v  Major decline hits Bulgaria’s river, sea freight traffic in Q4 2011

 

 

INVESTMENTS:

 

 

COMPANIES AND INDUSTRIES:

v  Chinese Great Wall starts car production in Bulgarian town Lovech

v  Seven companies compete for EUR 100mn modernisation project of Bulgartransgaz

v  EC assesses positively updated project for waste-processing plant in Sofia

v  Burgas city to invest EUR 11.8mn in expansion of waste water purification plant

v  Bulgarian Mineral extracting company Kaolin mulls investing further in Ukraine

v  State General Reserve Fund of Oman gets control over TechnomarketDomo

v  Revenues of leading wireless telecom MobilTel fall 6.5% in 2011

v  Revenues of wireless telecom GloBul decline by 2.6% in 2011

 

 

 

 

 

 

 

Articles:

 

MACROECONOMY:

IT leads in job creation in Bulgaria – economist

Bulgaria’s labour market will stabilise in 2012 and for the first time since the economic crisis started, new jobs will catch up with job losses, UniCredit Bulbank chief economist Christofor Pavlov was quoted as saying by Capital Daily.
On February 21 2012, the National Statistics Institute said that unemployment in Bulgaria was 11.4 per cent in the final quarter of 2011. More than half of jobless people had been unemployed for more than a year. Youth unemployment had reached 28 per cent, according to the statistics institute. Pavlov said that IT companies were leading in job creation, having created 5800 jobs in 2011, while they were expected to create a further 7500 jobs in 2012. He said that the IT sector would continue to expand, with job growth of a steady 20 per cent a year. But in other sectors such as industry and commerce, job losses would be 9000 on average. New sectors would emerge, requiring skilled employees. Companies offering outsourced accountancy, legal and consultancy services, among others, would employ 11 500 people in 2011, having created 9200 new jobs in 2011. Small companies and family businesses in Bulgaria were still being hard-hit by the economic crisis. According to the National Statistics Institute figures, about 10 per cent of Bulgarians who had been self-employed or had their own businesses had become unemployed between the final months of 2010 and the end of 2011. Of the total number of unemployed, only six per cent were actively seeking jobs.

 

 

EC Lowers Drastically 2012 Growth Forecast for Bulgaria

Bulgaria's economy will register a growth of 1.4% in 2012, according to the February Economic Forecast of the European Commission unveiled Thursday. Brussels's new growth forecast for Bulgaria is 0.9 pp lower than it was in November 2011; it estimates Bulgaria's 2011 GDP growth at 1.8%, after the 0.2% growth in 2010. At the end of 2011, Bulgaria's Finance Minister Simeon Djankov announced that the 3.7% economic growth projected in the 2012 State Budget Act was too optimistic and the Bulgarian government lowered its forecast to 2.3.%. Following is the section on Bulgaria of the EC February 2012 Interim EconomicForecast: "The Bulgarian economy has revived relatively slowly over 2010-11, with real GDP in the fourth quarter of 2011 still about 3% below its peak value recorded in 2008. The GDP flash estimate for the fourth quarter of 2011 indicates growth of 0.4% q-o-q and 1.5% y-o-y. For 2011 as a whole, annual growth is expected to reach 1.8%. The growth momentum from 2011 has had a marginally positive carry-over to 2012. As in other EU Member States that are catching up, the growth pattern in the initial recovery has been largely driven by strong exports of both goods and services, while domestic demand has remained stagnant, reflecting a rapid adjustment and an unwinding of imbalances in the private sector. The strong rebound in exports has been levelling off over 2011, and monthly industrial production indicators, as well as industry confidence readings point to markedly lower export growth going forward. Nevertheless, in spite of the weaker outlook in the euro area, Bulgaria is not expected to fall back into a recession. Annual growth has, however, been revised down (by 0.9 pp. less than projected in the autumn forecast) and is now forecast to reach 1.4% in 2012. GDP growth is expected to remain rather low in the first half of 2012, but to accelerate gradually thereafter in line with economic activity picking up in the EU as a whole. Following the rapid rebound in exports over the past two years, domestic demand is expected to pick up with a lag and become a main driver of growth in 2012, especially since domestic economic fundamentals have improved amid the rapid adjustment process. Private-sector imbalances have unwound very quickly, as indicated by the current account swinging into a surplus, while the ratio of private sector debt to GDP has started to decline and the dependency of the financial sector on external financing is decreasing. In spite of vulnerabilities, the financial sector has remained stable and has provided for modest growth in private sector credit in 2011. The economy also benefits from relatively strong public finances, which do not face major adjustment needs in the longer term. The gradual revival in private consumption is expected to continue. While economic confidence readings declined over the final quarter of 2011, sentiment recovered in January 2012 and is somewhat stronger than the EU average. Following a markedly strong and protracted period of labour shedding, the labour market appears to be stabilising in 2012. Even with weak employment performance, household income has been supported by relatively strong growth in average wages, probably driven by catching-up effects from low levels and structural changes in the labour market. Investment is expected to be upheld by public sector projects. After a notably slow start in EU structural funds intake over the previous years, it is planned to increase absorption significantly in 2012. However, this is countered by weak private investment activity, given the relatively high debt stock of the corporate sector, which entails further deleveraging of corporate balance sheets. HICP inflation slowed considerably over the course of 2011 and amounted to 3.4% in 2011 on average, 0.3 pp. less than expected in the autumn forecast. Inflation is expected to moderate to 3% on average in 2012, supporting growth in real purchasing power of consumers. The forecast baseline scenario is subject to significant risks. A prolonged stress in financial markets could further delay the recovery in consumption and investment. Uncertainty regarding the consumption behaviour of households remains one of the major risks to the outlook, both on the upside and on the downside. Should households lessen their currently high precautionary savings rate, this could underpin stronger consumption growth."

 

Bulgarian-German Trade Turnover Up 14% 2011 Y/Y

In 2011, the trade turnover between Germany and Bulgaria has reached EUR 4.5 B. This is a 14% increase, compared to the previous year – 2010. The data was published by the German-Bulgarian Industrial and Trade Chamber. Bulgaria's exports to Germany are growing steadily. For the past ten years they have tripled, and in 2011 reached EUR 2.1 B (a 21% increase, compared to 2010). An increase was observed in imports from Germany as well, which in the last year (2011) reached EUR 2.4 B (an 8.5% increase, compared to 2010). The EUR 4 B threshold was last reached in 2008, reminds the German-Bulgarian Industrial and Trade Chamber.

 

Major Decline Hits Bulgaria's River, Sea Freight Traffic in Q4 2011

Bulgaria's maritime and river freight trade saw a staggering 33.7% year-on-year decline in the last quarter of 2011, according to data from the National Statistical Institute published Friday. The decline is massive in both maritime and river freight traffic: the freightvolume of Bulgaria's sea trade declined by 43.2% in Q4 2011, while the DanubeRiver freight quantity went down by 21%. At the same time, the number of passengers who used Bulgaria's Black Seatransport lines declined by 2.3% year-on-year, even though their total exact number was not released. In the last quarter of 2011, the freight traffic of Bulgaria's truck and railway transport grew by 16.1% year-on-year in international routes, and by 24% in domestic routes.

 

 

INVESTMENTS:

 

 

 

COMPANIES AND INDUSTRIES:

 

Chinese Great Wall starts car production in Bulgarian town Lovech

Bulgarian company Litex Motors and Chinese car maker Great Wall launched car production at the plant in the central Bulgarian city of Lovech yesterday (Wednesday, February 21), investor.bg reports. The project was started in the fall of 2009 when the two companies signed a cooperation agreement. The first test car was produced in November 2011. The cars, produced at the plant in Lovech, will be sold on the local and the European markets. At present, the number of the employed is more than 120 workers and will reach some 2,000 when the plant starts working at full production capacity of 50,000 cars per year in 2014. In 2012, the companies plan to produce some 2,000 automobiles. The investment in the car-assembling facility is to reach BGN 150-160mn (EUR 77mn – EUR 81.8mn) upon project’s completion in 2017. So far the investments is valued at BGN 55mn and is expected to rise to BGN 65mn upon completion of the first stage (cars assembling). 

 

Seven companies compete for EUR 100mn modernisation project of Bulgartransgaz

Seven companies submitted documents to participate in the tender for modernisation of six compressor stations of Bulgaria's natural gas transmission utilityBulgartransgaz, part of the state-run Bulgarian Energy Holding (BEH), Capital Daily says. Five of the candidates will reach the negotiation phase. The modernisation is part of the 2012-2014 business plan of Bulgartransgaz. Undisclosed sources of Capital Daily commented that the value of the modernisation, which should be completed in three years, will reach EUR 90-100mn. Bulgartransgaz plans to invest BGN 140mn in 2012 and BGN 200mn in 2013 and 2014. A part of the funds will be used for financing the construction of some 200km of gas pipelines. 

 

EC assesses positively updated project for waste-processing plant in Sofia

The European Commission (EC) has assessed positively the updated version of the project for the construction of a waste-processing plant in the capital city of Sofia, the press office of the Commission announced. The latest version of the project will allow raising the target amount of recycled waste through more effective treatment in a plant for mechanical and biological treatment. Also, the new project will avoid transporting waste at long distances. We remind that at the beginning of this month, Sofia municipality called a new tender for the construction of the mechanical-biological waste treatment installation, linked to the second stage of the construction of the waste-processing plant in the city. The indicative value of the project is set at BGN 208.3mn (EUR 106.5mn), VAT included. The facility should be projected and built in 19 months and afterwards tested for defects in the following one year. 

 

Burgas city to invest EUR 11.8mn in expansion of waste water purification plant

The municipality of the southern Black Sea city of Burgas will invest BGN 23mn (EUR 11.8mn) in the expansion of the waste water purification installation in Meden Rudnik District, Dnevnik Daily reads. The financing is provided by the country’s environment operational programme. The installation, which has been completed two years ago, has capacity to serve some 45,000 inhabitants, whereas some 80,000 people live in Meden Rudnik District. The project should be completed by end-2015. 

 

Bulgarian Mineral extracting company Kaolin mulls investing further in Ukraine

Local mineral extracting company Kaolin is considering investing in three more regions in Ukraine, Capital Daily informs. At present, Kaolin controls 51% of Pepernyanskii Karier Stekolnie Peski and a quartz sand enrichment factory in the village of Oleshnya, some 200km away from Kiev. The plant in Ukraine, which was inaugurated at the end of 2009 and produces 2,000 tons per 24 hours, accounts for some 20% of the total quartz sand sales of Kaolin. Kaolin exploits more than 40 fields and 18 production units in SEE countries. 

 

State General Reserve Fund of Oman gets control over TechnomarketDomo

The board of directors of London-listed fund Trans Balkan Investment Limited (TBIL), former Equest Investments Balkans, has approved the transfer of its 61.8% stake in consumer electronics and household appliances retailer TechnomarketDomo to the State General Reserve Fund (SGRF) of Oman, Capital Daily reads. on its part, SGRF is minority but largest shareholder in TBIL (33.3%). It acquired the right to buy the interest of TBIL in TechnomarketDomo for EUR 12.4mn. The initial deadline for finalising the deal has been set in October 2010, but was later postponed by one year. At the beginning of 2011, TBIL announced plans to sell the stake in order to improve liquidity after posting losses in the first half of 2010 and in 2009. 

 

Revenues of leading wireless telecom MobilTel fall 6.5% in 2011

The revenues of the Bulgaria's leading wireless telecom services provider MobilTel declined by 9.7% y/y to EUR 132.6mn in Q4 and by 6.5% y/y to EUR 527.7mn in 2011, according to the financial report of MobilTel's parent Telekom Austria. The contraction sped from 6.6% y/y in the previous quarter and was due to lower monthly fee and traffic revenues. It was due to fierce competition leading to lower prices and a decline in usage as a result of the challenging macro-economic environment. The earnings before interest, taxes, depreciation and amortisation (EBITDA) dropped by 19.2% y/y to EUR 58.1mn in Q4 speeding from 11.7% y/y in Q3. In 2011, EBITDA fell by 12.3% y/y to EUR 261.9mn. The operating income turned negative at 13.9mn as compared to positive value of EUR 27.6mn a year earlier. It fell by 66% y/y to EUR 42.3mn in the full-year readings. In Q4, an impairment charge in the amount of EUR 19.3mn for a brand name was recorded. 
The customer base of Mobiltel in terms of active SIM cards (wireless segment) added 4.8% y/y to 5.5mn at the end of December. Subscribers on contracts reached 67.4% of total at the end of December, down from 67.6% at end-Sep but up from 64.2% a year earlier. The company's market share was at 48.6% at end-Dec as compared to 48.4% at the end of September and 49.6% a year earlier. The average monthly revenue per user dropped by 19.7% y/y to EUR 7 in Q4 and by 13.1% y/y to EUR 7.2 in 2011. The country's wireless penetration rate reached 151.4% at the end of December as compared to 140.8% a year earlier, according to MobilTel estimates. The company reports that the number of its mobile broadband customers jumped by 52.1% in a year on strong demand for mobile broadband solutions. 

 

Revenues of wireless telecom GloBul decline by 2.6% in 2011

The earnings before interest, taxes, depreciation and amortisation (EBITDA) of the country’s second-largest wireless telecom operator GloBul decreased by 14.8% y/y to EUR 39.3mn in Q4 and by 9.3% y/y to EUR 156.2mn in 2011, according to the financial report of the Greek telecom group OTE, which holds the full stake in GloBul through its cell-phone arm Cosmote. EBITDA fell by 5.6% y/y in 2010. The EBITDA margin dropped by 6.1pps in a year to 37% in Q4 and by 2.8pps y/y to 37.9% in 2011 but remained above the group average (33.6% in Q4 and 35.2% in 2011). 
Revenues dropped by 0.8% y/y to EUR 106.1mn in Q4 and by 2.6% to EUR 412.5mn in 2011. Service revenues decreased by 0.6% y/y in Q4 (one-off growth of 0.8% y/y in Q3) due to intense competition in the business market segment and lower off-bundle customer spending. The total customers’ base of GloBul in Bulgaria reached some 4.26mn at end-December, up by 8.8% y/y. Post-paid customers rose by 13.3% y/y to 2.6mn or above 60% of all. The number of pre-paid customers also increased but at a lower rate of 2.5% reflecting innovative voice and data solutions. The average monthly consumption rose by 2% y/y to 152 minutes per month in Q4 but the average revenue per user dropped by 9% y/y to BGN 14.9 (EUR 7.6) respectively. The number of subscribers of fixed telephony over the mobile network of GloBul as well as its mobile data services continued rising strongly. According to GloBul, the market penetration has reached some 147%. 

 

Reported by:

Georgi Iliev

KOTRA Sofia

Korea Trade-Investment Promotion Agency

Commercial Section of the Embassy of the Republic of Korea